Scrap stocks at China's qualified yards drop to 10-week low

The stocks of processed and unprocessed steel scrap held by the 584 licensed scrapyards in China continued to trend downward for the sixth straight week over April 7-13, or down by another 24,610 tonnes or 1.9% on week, Mysteel's assessment showed. Chiefly responsible for the persistent decrease were scrap traders' faster selling yet slower scrap recycling activities.

The scrapyards, all qualified by the country's Ministry of Industry and Information Technology, were holding a total 1.3 million tonnes of processed and unprocessed scrap by April 13, or hitting its 10-week low. Within the total, inventories of processed scrap were lower by 1.6% or 15,530 tonnes on week at 946,570 tonnes, and those of unprocessed were down by 2.5% on week at 349,950 tonnes, the survey showed.

A worsening pessimism among scrap market participants and frequent scrap procurement price cuts by domestic steelmakers have added to some scrap traders' concerns about further scrap price declines and shrinking demand from mills, forcing them to accelerate their pace of delivering scrap to mills to maximize their profits at current price levels, according to a Shanghai-based market watcher.

Last week, domestic steel scrap prices continued to decrease following the fall in finished steel prices. For example, Mysteel's steel scrap price index edged down by another Yuan 21.8/tonne ($3.2/t) on week to Yuan 3,149.2/t on delivery as of last Friday, while China's national price of the HRB400E 20mm dia rebar under Mysteel's assessment had fallen by Yuan 86/t on week to Yuan 4,100/t, both including the 13% VAT.

Another factor behind the decrease in scrapyards stocks was the slower scrap recycling activities over the past few weeks, Mysteel Global noted.

"The frequent rains in many regions of China in the previous few weeks have affected the outdoor scrap recycling and processing activities, and disrupted road transportation as well. This led stocks in scrapyards to decline," the market watcher observed.

Written by Lindsey Liu, liulingxian@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.